In the Short Run, If the Economy Is in a Phillips

question 117

Multiple Choice

In the short run, if the economy is in a Phillips phase of the inflation-unemployment relationship, an increase in aggregate demand will generate

• A) an increase in the price level and an increase in the unemployment rate.
• B) an increase in the price level and a decrease in the unemployment rate.
• C) an increase in the price level and no change in the unemployment rate.
• D) a decrease in the price level and an increase in the unemployment rate.

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Definitions:

Cost Allocation

The process of assigning indirect costs to different departments, products, or cost objects within a company.

Asset Devaluation

Asset devaluation refers to a reduction in the value of an asset over time, often due to changes in market demand or obsolescence.

Declining-Balance

A method of accelerated depreciation in which an asset loses value by a certain percentage rate each year over its useful life.

Depreciable Cost

The cost of a fixed asset minus its salvage value, representing the total amount that can be depreciated over its useful life.